In case you don’t know, gold has been the most accepted money around the world dating back even in the Old Testament era. It also keeps its value even if government collapse—and this is the reason why our current economic pathway is dictated by countries with the highest number of gold bars. And as the majority of gold is owned and handled by a limited number of countries, it is only apparent that people are looking into other alternatives.
The Winklevoss twins echo the same sentiment and are looking at Bitcoin as a good option against gold. At a Business Insider event in New York, they argued that Bitcoin is and will be a permanent new feature in the financial landscape and went so far as to preaching that someday, it may be worth $40,000/btc.
Benefits of Bitcoin over gold
In the same conference, the Winklevoss twins highlighted the benefits of bitcoin against gold. They said that it’s “more portable, more liquid and more divisible.” They also said that it is impervious from “quantitative easing” from central governments and banks and lastly, “speculative mania is hardly unique to virtual currencies.”
They also love its transparency; saying that “there is nothing predictable or transparent about the US dollar. No one has any idea what the Federal Reserve’s going to do, how they operate.” And because it is not controlled by a central bank and has lower inflation risk, there will only be 21 million bitcoins mined. Its biggest problem now is volatility.
But it is good to note that the Winklevii (as they are popularly known) owns 1% of the 12 million bitcoins in circulation today. Speculators believe that they are positioning themselves as a purveyor of bitcoin in the financial market. But only time will tell what their plans are.
Doubts over bitcoins
Bitcoin cynics abound and one of the most prominent companies that doubt its viability is Western Union. In a presentation posted in their website, it focused on bitcoin’s lack of adoption and liquidity, the undeveloped consumer interfaces and the regulatory issues that needs to be addressed before it becomes readily acceptable to the public.
Ben Laurie, a distinguished cryptographer, is also hesitant about this crypto-currency. He has written three posts disparaging it and the highlight is as:
“Bitcoins are designed to be expensive to make: they rely on proof-of-work. It is far more sensible to use signatures over random numbers as basis, as asymmetric encryption gives us the required unforgeability without any need to involve work. This is how Chaum’s original system worked. And the only real improvement since then has been Brand’s selective disclosure work.”
Authorities are starting to notice
In an article written by Alex Hern for The Guardian, in November 2013, US Federal Reserve chairman Ben Bernanke, the Bank of England, the Winklevoss brothers and the US Department of Homeland Security decided to take Bitcoins seriously.
Before Bernanke faced a Senate hearing, he issued a letter that stipulates that bitcoin “may hold a long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
Just recently, the Chinese government banned commercial banks from accepting bitcoins because “the central bank doesn’t want to recognize it because it represents a hole in the current monetary system and makes it difficult to regulate.”
What should we do?
Bitcoin famously came into spotlight when the Federal officials seized $28 million worth of bitcoins in the illegal drug marketplace Silk Road back in October 2013. One reason why many analysts don’t believe its viability is because it can be easily used in buying illegal drugs and prostitution.
But Cameron Winklevoss said in a TV interview that “everyone recognizes the innovation and doesn’t want to stifle it. They just want to make sure there are healthy regulations so it’s used in a safe and productive manner.”